Impact of the staggered production in Guangdong on die-casting zinc alloy plants

SHANGHAI, Jun 2 (SMM) – Power consumption continued to rise in Guangdong. The current highest demand for the entire province has exceeded the highest load of last year. Downstream enterprises in Shenzhen, Guangzhou, Foshan, Dongguan, Zhongshan and Kaiping in Guangdong have been required to implement staggered production since May. The restrictions tightened last week. In some regions, smelters have suspended production for 2-3 days per week while some smelters operated from 11pm-8am. According to SMM survey, the implementation rate of curtailment is relatively high, especially for companies using electric furnaces, but some downstream companies commented that the actual impact was not as large as expected as the power transformation from coal to gas has already been completed, and plants were equipped with generators.

Compared with staggered production, producers saw a sharp decline in orders. In addition to seasonal weak demand, end-users also have staggered production.

At the same time, price increase of raw material also pressured on restocking and the appreciation of yuan has affected exports of end-users. Prices of die-casting zinc alloy in Gunagdong were higher than Shanghai as companies restocked zinc ingots at Guangdong prices to produce alloys, and sold them in the form of Shanghai prices plus processing fees, bringing about higher cost pressure for alloy plants and weakening production momentum. Time of duration for power curtailment remains as the market focus.